Term Life Assurance

A quick look at term life policies and how they work.

Term life assurance premiums only cover you if you (or your partner in a joint policy) die during the term. Otherwise this type of policy has no value whatsoever; but for that reason it’s very economical- and all the more so if you’re a non-smoker.

Term Life Assurance is a life insurance policy which covers the value of the life of a person in return for a payment called a premium. Premiums are usually payable monthly (and ideally by direct debit) but occasionally yearly-pay policies are offered. Term life assurance is the cheapest and simplest form of life cover, operating for a fixed term only. The sum assured (the payout) is payable only if the assured person or persons dies within that term. There is no investment value to the policy, and therefore if the assured does not die, no payout of any sort is made. When more than one person is covered (e.g. a married couple), you can choose whether the policy pays out on the first or last death- and premiums will be altered accordingly.

These days term life assurance policy premiums usually vary depending on whether or not the person to be covered is a smoker or non-smoker. Unfortunately, if you’ve just given up, a non-smoker is generally defined as someone who has not smoked cigarettes in the last 12 months- but if you have just given up for a whole year, then you might be interested in re-evaluating your life policy! Oddly, cigar and pipe smokers are sometimes classed as non-smokers.